Posted on: Monday, August 20, 2001
60 Seconds on Business
Perks keep top customers happy
By Dr. Drake Beil
President, Solutions Inc.
You have lots of customers, but I want to focus on one special group that you can identify, measure and track for future marketing and sales success.
Let's call this group the A-team. They give you most of their money. You are their favorite and they spend, say, between 80 percent and 100 percent of their available dollars with you. What are they worth to you in an average year? If you don't know, you better find out. Industry average in supermarkets, for example, means a loyal shopper is worth more than $5,000 a year in gross margin. What's their average contribution to your sales and profits?
That contribution forms a baseline for all future programs and provides a simple way to measure your success. More importantly, you want to keep every one of these A-customers. Now, how well you do with them can be measured against the goal of 100 percent retention. These people are mission critical for your business because if they don't stay with you, who else will?
What they want and should receive is preferential treatment, best-possible pricing and bonus values. That's why you see the plethora of loyalty programs for just about everything from air miles to phone minutes to grocery bills. In fact, one day you'll be able to buy something on your credit card and get air miles, hotel points, car rental upgrades, phone minutes, a case of Coke and a shoe shine.
It's not that crazy yet, but to plan how to keep these customers, you should look at cross-selling them. Think about the "perfect" customer and understand how much they could buy from you if they bought everything possible.
That's a goal to aim for with A-customers. In time-share sales, additional units to previous buyers is called "reloading." It works because they'll see these new opportunities as value-added products or services and even if they say no, at least you asked and they'll feel that you cared enough to think of them. If you don't ask, and a competitor figures out what they want that you aren't providing, they can begin to steal these customers away from you.
Banks have long-known that multiple account relationships increase loyalty and decrease switching. So does special treatment for special customers. They invented "private banking" and even call regular account managers "relationship officers" to emphasize the importance of bonding with the customers. That connection with a person, in itself, might be the difference that makes a difference in terms of whether you keep them in the future.
Reach Dr. Drake Beil at drake@60secondsonbusiness.
